Madalena Energy still in talks with a number of parties

Third quarter results from Argentina-focused oil and gas company Madalena Energy Inc (CVE:MVN) underscored the reasons for the company’s recently announced strategic review.

The average price received per barrel of oil equivalent (boe) in the three months to the end of September was US$56.72, down from US$67.62 in the same period of 2015.

The price was, at least, a little better than the US$55 a barrel it had been expecting. The main reason for the dramatic fall was the lowering by the government of Argentina of the benchmark price of oil – known as Medanito.

Average daily sales declined to 1,853 boe from 2,705 boe the year before, resulting in oil and gas revenue declining to US$11.73mln from US$20.82mln the year before.

The company made a net loss of US$12.72mln versus a profit the previous year of US$7.94mln.

Crude oil and natural gas liquid sales volumes for the three month period declined to 1,853 boe per day from 2,705 boe per day the year before. The decline can be attributed to production declines at both Surubi and Rinconada – Puesto Morales.

Natural gas sales volumes fell to 2,368mln cubic feet per day (mcf/d), compared to 3,843 mcf/d last year, due to lower production at Rinconada – Puesto Morales and CA-Norte.

“While the decrease at Rinconada – Puesto Morales was from natural declines, the Surubi decline was a function of a delay in remedial work. Subsequent to September 30, 2016, the remedial work program at Surubi commenced and is currently ongoing. The company believes that the remedial work program will allow incremental production to be brought back on line.

The previously announced strategic review continues, with the company and its financial advisor actively involved in negotiations with a number of parties who have expressed interest in various transactions with Madalena.